Malaysia

Anwar says sugar subsidy removal means a sweet RM1 billion profit for sugar giants

Anwar says the two main sugar companies in the country would make a combined profit of RM1 billion. - The Malaysian Insider pic, October 28, 2013.Anwar says the two main sugar companies in the country would make a combined profit of RM1 billion. - The Malaysian Insider pic, October 28, 2013.Putrajaya's move to remove subsidy for sugar stands to benefit sugar manufacturers, including the company owned by tycoon Tan Sri Syed Mokhtar Al-Bukhary, said opposition leader Datuk Seri Anwar Ibrahim.

Anwar said the sugar industry will collectively rake in RM1 billion in profit.

"The gross income of the sugar industry is about RM4 billion a year. Normally, the profit before tax is around 9%. After the entry of Tan Sri Mokhtar into the sector, the profit before tax increased to 15%.

"By removing the subsidy, profit before tax for the companies is expected to jump between 20% and 25% with a return of RM1 billion," Anwar, a former finance minister, said in his speech during the debate on Budget 2014 in Parliament today.

The removal of the RM0.34 subsidy per kilogramme of sugar was announced by Prime Minister Datuk Seri Najib Razak last Friday in his Budget 2014 speech. The retail price of sugar is now RM2.84 per kg. It also means the government would save RM551.25 million in annual sugar subsidy.

Anwar said Najib's move would only strengthen the monopoly of two main companies dealing in the commodity, namely Central Sugar Refinery owned by Syed Mokhtar's Tradewinds, and plantation giant Felda Global Venture's Malaysian Sugar Manufacturing.

He said the sugar industry is monopolised by both companies and called for the removal of such a monopoly to allow for a free market economy.

"A liberalisation of the industry is needed in order to avoid continuous monopolies and also stop sugar prices from continuously going up," he said.

He also took Najib and his deputy Tan Sri Muhyiddin Yassin to task for claiming that too much sugar led to diabetes.

"Such statements are not factual. If that's the case, then the subsidy for rice should be reduced as well because carbohydrates also contribute to diabetes. Don't they know basic facts? This is embarrassing," he said.

He also took the government to task for implementing the Goods and Services Tax (GST), describing it as a regressive tax that would contribute to income inequality and widen the gap between the rich and the poor.

"GST can be the main cause of inflation," he said, citing a study by CIMB Research that the implementation of GST would contribute to a 5% increase in inflation due to lack of stringent enforcement laws.

"GST should not be introduced and should be further studied until the people earn a satisfactory living, tax collection is improved and the country's financial standing is at an encouraging level," he said. - October 28, 2013.

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